Non-bank real estate capital — flexible, fast, asset-based.
A private money loan is real estate financing provided by a non-bank, non-conforming lender. The term encompasses everything from individual investors using their own capital to institutionally-funded private capital firms like Matrix Commercial Capital. The common thread: faster, more flexible underwriting than a bank, secured by the property itself rather than the borrower's personal financials.
"Private money" is an umbrella term for everything that isn't bank financing. At one end, it includes individual private lenders — a wealthy uncle, a self-directed IRA, a real estate attorney with capital — making loans directly to investors. At the other end, it includes institutional private capital lenders with hundreds of millions in committed capital, programmatic underwriting, and dedicated servicing platforms. Matrix sits at the institutional end.
The market historically distinguished "private money" (individual lender, more relationship-based) from "hard money" (commercial program, more standardized). In practice today the terms are used interchangeably, and most active operators borrow from a mix of both — using individual private money for niche deals (lower rate, more flexibility) and institutional private capital for scale, speed, and consistent execution.
What separates private money from a bank: (1) Asset-based underwriting — the property, not the borrower's tax returns, qualifies the loan. (2) Speed — close in 7–14 days vs. 45–90 at a bank. (3) Flexibility — non-standard property types, vacant assets, mid-rehab properties, and LLC/trust borrowers all welcome. (4) Higher rates — the cost of flexibility, typically 8–12% on residential vs. 6–7% bank pricing.
Private money is the right tool for time-sensitive acquisitions, distressed and value-add properties, self-employed and LLC borrowers, and operators who need certainty of close more than they need the absolute lowest rate. It is rarely the right tool for long-term holds where the rate matters more than speed — those deals eventually want to refinance into bank, agency, or DSCR perm financing.
| Off-market triplex, listed Friday, accepting offers Monday | |
| Purchase price | $385,000 |
| Required earnest money | $15,000 |
| Required close date (per seller) | 14 days |
| Bank financing timeline | 45–60 days — disqualified |
| Private money loan: 75% LTV | $288,750 |
| Rate / term | 9.5% interest-only / 12 months |
| Borrower plan | Lease-up + refi into DSCR perm at month 7 |
| Time to close | 10 days |
Functionally none today — both terms refer to non-bank, asset-based real estate loans. Historically, "private" implied individual lenders and "hard" implied firms, but the modern market uses the terms interchangeably. Matrix qualifies as both.
Private money is asset-based (qualifies on the property, not the borrower's tax returns), faster to close (7–14 days vs. 45–90), more flexible on property condition and borrower entity, and priced higher (8–12% vs. 6–7% bank). It's built for active operators, not long-term hold financing.
Most smaller-balance private money loans carry a personal guarantee or recourse. Larger institutional deals ($5M+) can be structured non-recourse with bad-boy carve-outs. Matrix structures both depending on size and sponsor.
Generally no — private money is structured for business-purpose loans (investment property) under TILA/Reg-Z exemptions. Owner-occupied loans are heavily regulated and don't fit the private money model. Use conventional or non-QM bank financing for primary residences.
Most operators refinance into either a bank/agency perm loan (stabilized commercial), a DSCR loan (rental property), or sell the asset. Private money is structured as transitional capital; nearly every loan has a planned exit at origination.
Matrix is a Chicago-based private capital lender funding residential, multifamily, and small-balance commercial real estate nationwide. 7–14 day close. Asset-based. Built for operators.
